“Poison pill”, white knight … Understand everything about the battle between Elon Musk and the social network

This is the great battle that is shaking Silicon Valley. After acquiring 9.2% of the capital of Twitter in early April, Elon Musk launched an unsolicited takeover bid to try to take over the social network, promising to become the champion of freedom of expression. While Twitter is likely to officially reject his proposal by the end of the month, the company on Friday adopted a “poison pill” intended to thwart the Tesla boss’ offensive. Will Elon Musk raise his offer? Can Twitter find a white knight? The outcome remains uncertain and leaves no one indifferent.

Why Elon Musk wants to buy Twitter?

“I invested in Twitter because I believe in its potential to be the planetary platform for freedom of expression (…), which is a societal imperative for the functioning of a democracy”, writes Elon Musk in his letter to the stock market authorities. According to him, Twitter is a prisoner of Wall Street and short-term imperatives, and needs “to be transformed into a private company”. During an interview on the TED stage in Vancouver, he assured last week that his goal was “not to make money” but to ensure that Twitter could play its role as a “public place in which one can speak freely within the limits of the law”.

Why doesn’t Twitter welcome it with open arms?

As often with Elon Musk, everything can change very quickly. Twitter and its new boss, Parag Agrawal, first offered a seat on the Board of Directors to whoever became its largest individual shareholder. But Elon Musk finally announced that he would not join the board.

He then offered to buy all shares of Twitter for $54.20 (the number 420, pronounced “four-twenty”, is the symbol of cannabis in the United States and a recurring joke of Elon Musk), valuing the network at $43.4 billion. A premium of 18% on last Wednesday’s closing price far from stunning, notably rejected by the Saudi prince Al-Walid Ben Talal, who owns around 5% of Twitter. Beyond a fair-war bargain, there are “philosophical differences” between Twitter and Elon Musk, analysts at Mizuho Securities write in a note.

What is the “poison pill” adopted by Twitter?

Twitter, which is due to present its quarterly results on April 28, has not yet officially given its response. But on Friday the company adopted a “poison pill” designed to prevent – or at least complicate – a hostile takeover. According to this clause, if Elon Musk or another investor crosses the bar of 15% of the capital, the rest of the shareholders will be able to buy newly issued shares at a reduced price. This would therefore dilute Elon Musk’s share, thus preventing him from obtaining a majority of the titles, unless he broke the bank.

What are the reactions to Elon Musk’s coup?

Unsurprisingly, the web is cut in half. Elon Musk can count on his fan club, notably on podcaster Joe Rogan or crypto investor Cameron Winklevoss – sworn enemy of Mark Zuckerberg at Harvard. Musk, who defines himself as an “absolutist” of freedom of expression, believes that the platforms have gone too far by posing as arbiters of disinformation, with a moderation which, according to him, drifts towards “censorship” which culminated in the ousting of Donald Trump.

But for many, the idea of ​​entrusting the network and its 217 million daily users to a boss who himself uses Twitter to troll or attack his enemies does not go well. “Let’s hope that Elon Musk’s offer does not triumph”, writes the editorial staff of the washington post in an editorial. To avoid returning to a time when Twitter “(could) be exploited to manipulate elections, spread misinformation or harass internet users in packs”. And there are those, like the accountant Francine McKenna, who implicitly accuse Elon Musk of trying to manipulate the course of Twitter. In 2018, he had already been slapped on the wrist by claiming – wrongly – to have secured the private funds necessary to get Tesla out of the stock market.

Can Twitter find a white knight?

The social network, which is struggling to make money, has been fueling envy for years. In the face of Elon Musk’s offensive, his salvation could come from a white knight making a better offer to shareholders. A takeover by a tech giant seems unlikely these days, as competition authorities want to avoid past mistakes – like letting Facebook buy WhatsApp and Instagram. But according to the financial channel CNBC, private equity firm Thoma Bravo is reportedly considering making an offer. Opposite, the giant Apollo Global Management could support a takeover – of Elon Musk or another party – by providing equity or debt, indicate the New York Times and the wall street journal. The big maneuvers are just beginning.

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